Private nonresidential construction spending unexpectedly increased 2.7 percent in March and is up 1.2 percent compared to last year, according to a May 4 report by the U.S. Census Bureau. Overall, total nonresidential construction spending increased 2 percent in March to $703.8 billion, up 1.7 percent from a year ago.
“Searching for ‘green shoots’ has become a major preoccupation for economists in recent weeks,” said ABC Chief Economist Anirban Basu. “The term was used by Federal Reserve Chairman Ben Bernanke and refers to early indications of economic stabilization. Since that time, economists have identified a number of ‘green shoots,’ including consumer spending, durable goods orders and financial market performance.
“The latest data regarding total nonresidential construction spending represents another ‘green shoot,’ Basu continued. “It shows movement consistent with capital market thawing and a re-expansion of credit availability, at least for certain types of construction activities.”
Construction subsectors posting the largest monthly gains include power plants, up 8.9 percent, and lodging, up 5.2 percent over February. Meanwhile, manufacturing construction saw the largest increase on a year-over-year basis, rising 63.9 percent, followed by power construction, up 15.2 percent.
In contrast, among the four subsectors posting monthly decreases in spending is religious construction, which fell 9 percent. The construction subsectors with the largest losses compared to March 2008 include communication, down 33.5 percent; commercial, down 20.5 percent; and religious construction spending, down 11.1 percent.
“As the stimulus package continues to deliver more impact with the passage of time, it is likely that infrastructure-related construction – including power, transportation and water supply – will progress even as less directly-impacted segments, such as office and commercial, struggle to generate monthly or annual gains,” Basu noted.
Public nonresidential construction spending increased 1.2 percent for the month and is up 2.5 percent from the same time last year. However, residential construction spending dropped 4.1 percent in March and is down 33.3 percent on a year-over-year basis. Overall, total construction spending was up 0.3 percent on a monthly basis and is down 11.1 percent from March 2008.
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